November 7, 2020 | Posted in Bookkeeping
It is reasonable to understand why business owners typically hate taxes; it can be a very complicated task. Unfortunately, it is also the reason why too many of them tend to take a reactive approach to taxes rather than a proactive approach.
You should be reviewing your tax situation on a semi-annual, if not quarterly basis. Many business owners wait until after the fiscal year is over before having a tax review. The problem with that approach is that you can’t do much about your tax situation once the tax year is over. Having a tax review and estimate with a CPA before year-end is probably one of the most critical things you can do regarding taxes.
A tax review will do two very valuable things. First, you will understand your potential tax liability and you can make any tax advantageous moves or purchases before year-end. Second, you will have a tax liability estimate, which will give you several months’ notice so that you can plan to pay any taxes that are due.
The above tax planning is only possible if you are maintaining an accurate bookkeeping system that is updated on a regular basis. In addition to making you more prepared, it will save you money on accountant fees at tax time.
The financial aspects of running a small business can be painful, but they don’t have to be. There are plenty of characteristics of being a business owner that cause stress. Proper bookkeeping can cure many of the ailments caused by the subject of tax.